Discount membership club agrees to pay for refunds to Iowans

The Iowa Attorney General’s office has reached a financial settlement with a discount membership club over deceptive marketing practices. Connecticut-based Affinion Group will pay a little more than $6-million to the state, $5-million of which will go into a fund to compensate Iowans who were misled into joining a program with monthly fees.

Attorney General Tom Miller says Iowa has already collected $40-million from a court case involving another company and even more will be collected from others. “Fifty million…40-million in hand, 50-million projected…is a huge amount of recovery for Iowans,” Miller said at a news conference in his office today.

A couple of common marketing practices are being targeted by the A-G’s office: “live checks,” in which consumers are enrolled in a membership club by simply cashing a check that’s mailed to them, and “online data pass offers,” in which people are signed up for memberships automatically after buying something online. Hundreds of thousands of Iowans have been misled into signing up for the supposed “free trials,” only to be billed $8 to $10 dollars a month.

Jeff Thompson is the Deputy Attorney General for Litigation in Iowa. “We had at least a handful of consumers who had been paying for many, many years — 10 or 11 years — monthly charges for memberships they were not aware that they had,” Thompson said.

Miller said those Iowans will be reimbursed for most — if not all — of their losses. “Anybody who has had any kind of transaction like this, we encourage them to contact our office,” Miller said. “The relief that we’re getting is sizable…we’ll be able to cover most, if not everybody that responds.”

Assistant Attorney General Steve St. Clair said buying clubs are not as prevalent as they were just a few years ago, but there are still some out there trying to dupe consumers. “And ultimately, the front line of defense is consumers who are vigilant and check their bank statements and credit card statements to see if there are any charges that they don’t clearly understand, and then challenge them,” St. Clair said.